Now that we are pretty much done with performance reviews, it is a good time to look at some truths about performance ratings.
Note: this is not about your performance review where you and your manager (hopefully) talk through your work during the period. Instead, this is about the rating number you were given that is associated with that review.
If you are in a large enough company, the typical performance ratings range from a 1 (you don’t have a job, so leave now) to a 5 (where you walk on water).
Most companies will argue that a 3 (successful) is where the vast majority of employees should be for their rating. That makes sense. Most people are successful in their work; they are not walking on water in terms of the work they do.
Combine this 1-5 approach to ratings with what you then get paid as a raise and/or bonus and you can get to some naked truths about performance ratings.
Every business has a budget and, most often, labor is the largest portion of that budget. It makes sense to control the budget, so management sets up an essentially fixed dollar amount for labor costs going into the next year. It is planned.
That means that the company gives your manager a fixed amount of money to work with when assigning raises and bonuses. There is only so much money to go around.
So if you have five people in your group who are legitimate stars, the probability of them all being rated a 3-successful is pretty high. Because there is only so much money to go around. Asking to have some money from some other department to compensate your star employees just doesn’t happen. Getting that to happen would be considered an extraordinary event.
The net effect of budget on your performance rating is that it tends to drive the ratings down to a 3.
Calibration is the process where similar job titles in a department have their job performance ratings reviewed by all the managers for the similar job title. Or, the entire department is evaluated by all managers depending on the size.
Let’s say you work in a hospital as a nurse. There are many different nurse titles with somewhat different specialties, but they all nurses. Or you work in technology as an engineer. There are lots of different specialties within technology, but, in this exercise, an engineer is an engineer.
Now your five star employees are compared against others with similar job titles and management has a discussion about the performance ratings your manager has given you.
Calibration exists to ensure there isn’t one manager handing out walking on water performance ratings while the rest of the department is not. And, yes, to ensure the total budget for the group is not exceeded.
The net effect of calibration on your performance rating is that it tends to drive the ratings down to a 3.
In fact, in most of the large companies I’ve worked for, 3’s aren’t reviewed in calibration, but all 2’s, 4’s, and 5’s are reviewed. Do you want to be safe and not have your rating challenged? Give the person a 3. It is an extraordinary event to have a 3 rating pulled up to a 4 in calibration.
Some companies rate on a bell curve. You can only have so many people outside a 3. They literally define the percentage of people inside the ratings.
Other companies force you to rate someone low, regardless of their performance. GE is most famous for doing this, but they don’t do this anymore because there is little incentive for a person to go work there when they were eliminating 10% of their workforce every year.
I was told as a manager at one of my companies that the lowest ranked person in my group had to be rated a 2- needs improvement. Even though my lowest ranking employee was actually the most improved employee I had in my group. He and I worked to get his skills up and attitude right in the prior review period and he did exactly that. And for that I had to rank him a 2?
My point here is this: your job performance rating often has very little to do with your performance. Instead, you are being slotted into a budget, compared to your peers, and get rated based on the management approach to performance ratings.
If you are rated successfully as a 3, what does it take to get to a 4 or 5?
It depends on how your company treats performance ratings. If there actually is a percentage of people that are expected to be rated in those two categories, you have a shot.
If you have a shot based on the company’s approach, the next serious question is what do you need to do to hit a 4?
Management usually can’t tell you. And they certainly can’t tell you if you do x, y, and z you’ll be rated a 4 (see: Calibration).
Usually, though, it involves longer hours. Volunteering for corporate stuff. Taking over something that is failing and turning it around (see: longer hours). Or something as simple as getting high visibility work and doing well at it.
So the first question is: what do you have to do to get a higher rating and deciding if it is worth doing the subsequent work to get there.
The second important question is: how many dollars is that higher rating worth? If you get a 3% raise compared to a 2% raise, is it worth the extra work?
If your bonus is $500 more with a 4 than a 3, is it worth the extra work?
It may not be. If you are solid in your successful rating and are meeting your personal standards for work, is it really worth a huge push to possibly get a higher rating?
Only you can answer that one.
Your work is worth the emotional investment. You need to build job skills, perform well, and, if you have high work standards as Cubicle Warriors do, you will be emotionally invested in your job performance.
What I’m talking about here is emotional investment in the performance rating, not your work.
Most of us think that if we perform really well, we will be rewarded through our performance rating. But that’s not really true. When performance ratings are part of budgets, calibration, and tied into the company’s approach to performance, your individual performance is much less, well, individual.
Your performance is much more about fitting into a category that fits into management’s approach to ratings. If 3 means “successfully performing the job”, that covers a pretty big and broad category.
There are a good number of people who have “never been rated less than a 4 in my entire career.” And then they get a 3. The are not happy about it.
But it’s not because their level of work is any different. That their personal work standards were lowered. It’s because that is how their company and/or manager now approaches ratings.
To flip this a bit, I look at how companies operate as it relates to performance and payouts based on how they set performance goals and execute performance rankings.
Based on how they do those two things, I now understand how the company operates.
And if the performance ranking approach is it takes a miracle to get a 4, much less a 5, then that is how the company will operate. My becoming a super human worker won’t change the rating.
And getting upset about that is worthy, but wasteful. What you were just told was the max raise and bonus you will get. It won’t change going forward. Either you accept that, or leave and find something different – and make sure you cover this in your interviews because you will most likely be disappointed again.
Some people can’t get past the individual performance equals a correct rating. I get that. I concluded a long time ago that it’s not worth the emotional investment — as long as I am performing to my high standards.
If you are still reading until here (thanks!), all of this is not meant to be cynical. Companies need to budget, they need to make sure performance is managed, and they need to have an approach to rating people and their work. Otherwise, it’s poor management.
But that doesn’t mean we shouldn’t understand how this works and the impact it has on our performance ratings. Then, when we understand how it works, we can change how we approach the whole performance rating process.